Exam 21: Title, Risk, and Insurable Interest

Under a lease of specific and ascertained goods that are already in existence, identification takes place at the time the contract is made.

Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot. Steel Parts separates 1,000 cases from the lot. Title and risk of loss

Ideal Gadgets, Inc., and Jolly Outlets Corporation enter into a contract for a sale of kitchenware. The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City. Risk of loss passes to Jolly when

Essen Corporation buys from Fallow Farms, Inc., a rice crop that Fallow plans to plant and harvest during the next growing season. Essen plans to sell the rice to Gourmet Grocery Stores. After the rice is planted, but before it is harvested, an insurable interest in the rice ex?ists in

A bill of lading serves as a con?tract for the transportation of goods.

Uri sells 100 cases of vitamins to Wanda, but before she takes physical possession, the cases are lost. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of

Eagle Company sells new and used motorcycles. Some of the motorcycles are held on consignment, including six consigned by Fine Cycles, Inc. While the Fine cycles are in Eagle's possession, title to them is held by

Little Jewelry Store orders display racks from Marketing Supplies, Inc. (MSI). MSI mistakenly ships racks of the wrong size and color, which Little rejects and returns via New Shipping Company. During the re?turn, the racks are lost. The loss is suffered by

When an owner holds fungible goods as a tenant in common, the owner cannot pass title to the goods without the other owners' acquiescence.

When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.

Twyla buys a bicycle from U-Pik-It Bike Store, which agrees to keep the bike for Twyla until she picks it up. Before Twyla gets the bike, a fire destroys the store and the bike. The loss is suffered by

Under a shipment contract, the risk of loss passes to the buyer when the seller places conforming goods in the possession of the carrier.

Lou's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless the contract states otherwise, this is

In the following situations, two parties claim the same goods. Who is most likely to prevail in each circumstance? Explain. (a) Olan steals Phil's television set and sells it to Quincy, an innocent purchaser, for value. Phil learns Quincy has the set and demands its return. (b) Riley takes his television set for repair to Silky, a merchant who sells new and used television sets. By accident, one of Silky's employees sells the set to Tuna, an innocent purchaser-customer, who takes possession. Riley wants his set back from Tuna.

If a sale involves crops that are to be harvested within twelve months, iden?tification takes place when the crops are planted or begin to grow.

When a lessee sells leased equipment to a third party, the lessor cannot, under any circumstances, recover the equipment from the buyer.

Unless a contract provides otherwise, it is assumed to be a destination contract.

Quality Computer Company agrees to sell one hundred hard drives to Retail Electronics, Inc. The hard drives, which Retail Electronics ex?pressly requires to have certain amounts of memory, are to be shipped "F.O.B. Retail Electronics distribution center in Memphis, TN." When the drives arrive, Retail Electronics rejects them and informs Quality Computer, claiming that the drives do not conform to Retail Electronics' memory re?quirement. A few hours later, the drives are destroyed in a fire at Retail Electronics' distribution center. Will Quality Computer succeed in a suit against Retail Electronics for the cost of the goods?

If a seller is a merchant, and the goods are not to be moved, the risk of loss cannot pass to a buyer.

NuStores accepts a shipment of DVD players from Open-Ur-Eyes Video, Inc. NuStores later discovers a defect in the players, revokes acceptance, and returns the players via Playback, Inc. During the return, the play?ers are lost. The loss is suffered by